I mean, sure, there’s a certain amount of smug self-satisfaction. We said he wasn’t ready. We said he’d be over his head. We said he could bring the whole shebang down on our heads because he wouldn’t know how to manipulate the levers of government. We said he would be weak and vulnerable to the people who bought him and gave him the coalitions he needed to win. But did anyone listen to us? NOOOOoooooOOOOo.
Now, we’re in a tight spot. And it’s affecting us PUMAs just like all of the other poor unfortunate people in America who don’t work on Wall Street. My ex just got laid off. I am now the only working parent. My BFF reports that the company that is taking over his company just laid off a $#@%load of researchers and he is feeling like a sitting duck. We’ve all hemorrhaged massive amounts of hard earned 401K funds that were supposed to cushion our retirements that were underfunded even when the stock market was at its peak. And all I want is to have a job long enough to finish the oncology project I’m working on so I’ll have something to be proud of on the day they escort me out the door with my cardboard box of silk plants and desk photos.
Meanwhile, commenter Diego Mamani at Naked Capitalism gives us this example of what is likely to happen under Geithner’s Plan:
Let’s see an example. “Bank” has a mortgage-backed security (MBS) with original par (nominal) value of $100. In 2008 Bank “marked-to-market” and now values the MBS at $95 in its books. But we all know that this MBS is worth a lot less, maybe less than $60, but Bank won’t acknowledge reality.
In 2009 we have the new Treasury plan, whereby “Peter” buys this MBS, for say, $90. That’s because the bank won’t take anything less. If it did, Bank would be shown to be insolvent and would be out of business.
Peter puts only $6 out of pocket. Uncle Sam puts another $6, and the remainder $78 is a nonrecourse loan from Uncle Sam to Peter. (Total, $90).
Then Peter turns around and sells the MBS to his pal “Paul” for $48. Paul pays $48 b/c he thinks the MBS is actually worth $58 as justified by what the homeowners will actually pay in monthly mortgage payments.
Peter’s $6 investment is wiped out. So is the govt’s $6. And the $48 Peter gets from Paul goes to pay back the govt loan of $78. So now, Peter lost $6 but Uncle Sam lost $36 ($84-$48).
Since Peter and Paul are buddies (co-conspirators), the latter can compensate Peter. Say, Paul gives Peter his $6 plus another $2 for his troubles. Paul pays $48 for something worth $58, but because he gave $8 to Peter, his profit is only $2. And the banks get fully $90 for paper that is worth actually $58.
Peter puts in $6, makes $2 profit
Paul puts in $48, makes $2 profit
U.S. puts in $84, makes a $36 LOSS
Bank had paper that was really worth $58 but got $90 for it, makes a $32 profit
What’s really weird about the above scenario is that we know $%@! like this is probably already in the works. It’s predictable. It’s human nature. It’s easy enough to do. And yet, knowing all of this, there’s probably not a damn thing we can do short of marching on Washington with our pitchforks and torches to stop it. No amount of suffering now or in the future by the hard working taxpayers of this country seem to be able to deflect Tim Geithner and Barack Obama from screwing us royally in favor of the bankers whose lifestyles must be saved at all costs.
No, we do not feel good about being right.
Join us on Conflucians Say at 10PM EST tonight to celebrate your perspicacity. It’s on PUMA United Radio (PURrrr)
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